Water Reallocation in the West: An “Inconvenient” Truth?


Water reallocation is one of the most important and most contentious issues facing the West. Reallocating water already in use may be simple and relatively uncontroversial if the water is being transferred locally to a similar use. For example, farmers in the same irrigation district may transfer water between themselves relatively easily. However, if water is to be transferred to another type of use or away from an area, negative reactions often result. The Klamath Basin reallocation from agricultural to endangered species illustrates the complexity of such confrontations. Similarly, the transfer of water from agricultural uses to urban uses can be difficult, controversial, and time consuming. Although unallocated waters exist in a few, generally rural locations, these waters must often be moved in order to be used, leading to local protests. Pick almost any city in the arid West (Las Vegas, Denver, Santa Fe), and the rural-urban conflict can be illustrated.

The issue is relatively easy to state – demand for water is increasing in the urban and environmental sectors, but most available water is controlled by agricultural users or, if undeveloped, is found in rural areas. In spite of local preferences to maintain the status quo, reallocation will occur whether “convenient” or “inconvenient.” Although protestors are sometimes successful, increased demands for a limited resource favor the eventual reallocation of some portion of the current water supply. However, reallocation is a dirty word in some places and conflicts seem inevitable. Resolving conflicts is difficult because the methods for reallocation are limited and often lead to some interests winning and others losing. What choices are there? How do people react when faced with reallocation? How can the potential conflicts be reduced? The answers to these questions are more complex than can be fully addressed in this dedicated issue, but reallocation can be put in context and hopefully stimulate further discussion.

With a limited number of choices for reallocation, how can policy makers reduce conflict and achieve goals that benefit society and the environment? Two choices dominate – markets and legislation – with courts playing a role when disputes occur. Water markets have long been accepted in the western, appropriation doctrine states. A water right is looked on as a property right which can be sold and transferred to another location, user, or use. Transfers are allowed as long as third parties and the public interest are not adversely impacted. High transaction costs may be associated with market transactions because determining adverse effects is unique to each transaction. This occurs because water rights are defined by a set of relationships that exist between the right holder and others that may have an interest or legal right in the same water as it passes through the hydrologic cycle. This set of relationships is spatially and contextually unique to each right. Because third parties and the public are protected from adverse effects, as defined by this set of relationships, market transactions do not always occur smoothly. The direct parties to a transaction may be in a win-win situation (buyer gets water and seller gets money), but others with an interest may not be. For example, the public's interest in water may not be adequately represented in a market transaction. The “public” may want water for in-stream flows, but the transaction might not provide water for that purpose. The public's interest in water has also changed. When most agricultural water rights were established, economic uses that diverted water from streams were the norm. Today other public values need to be considered. Markets could be developed that incorporate public values and changes have been made in the way states interpret “public interest” in approving transfers, but change has been slow and uneven. Market rules need to be redefined to better accommodate the public interest.

Because markets are not designed to take all public values into account, legislation has been used to protect these values. At the federal level this can be seen in the Endangered Species Act, Wild and Scenic Rivers Act, and the Clean Water Act. States have similar legislation protecting the environment, granting the public recreation rights, or withdrawing water from appropriation. This legislation is imposed on a system of water rights created under state law and recognized as legitimate at the federal level. Although state and federal legislation can impose limits on the way water right holders use their water, these limitations have to occur within the constraints of state and federal constitutions. At some point, restrictions may so limit water use that an unconstitutional taking of property may occur. The line between unconstitutional takings and legitimate regulation of property is not a clear one. Conflicts are exacerbated because of the attitudes water right holders have toward their rights. Although land owners have generally accepted land use regulations, restrictions on how rights holders use water are almost invariably met with protest. Regardless of constitutionality, legislative or regulatory limitations on the traditional uses of water are unpopular. This opposition is similar to what occurs when someone wants to transfer a water right to a different area. This brings us to the next question.

How do people react to proposed reallocations? The simple answer is – generally not well. Emotions range from vehement opposition to mild disapproval. This occurs whether transfers are involuntary as a result of legislation or whether they result from a market transaction between consenting parties. People who object are not the same in the two cases. The water right holder may object to a restrictive regulation, but it is third parties or the public who object to market transfers. In some locations reallocation is more common and a grudging acceptance has replaced the tensions that occur when reallocation is first proposed in an area. Some examples may be helpful.

Recently a developer applied for permits to develop ground water at a location 60 miles west of the Rio Grande in the middle of rural New Mexico. The water is on a ranch owned by an out-of-state businessman. He proposes to drill 37 wells that will supply 54,000 acre feet of water. The local community of Datil, about 300 persons, turned out for a public meeting on the application. They were not happy. For the ranch owner the proposed use makes sense. Water rights in the Rio Grande are selling for $15,000-25,000 per acre-foot demonstrating the demand. The rancher is willing to sell the water to cities, farmers, or environmental interests. Locals were concerned about the impact on the local economy, the impact on their shallow wells, and the unpredictability of the proposed action. The most interesting reaction came from a local who filed a report with the FBI on “this new form of terrorism” (Albuquerque Journal Dec. 9, 2007, pg. B1).

The Southern Nevada Water Authority has been buying ranches and the water rights associated with them. Local ranchers oppose the transfer of 6 billion gallons of ground water per year from three watersheds to Las Vegas. The proposed pipeline project has partial approval from state regulators. Lawsuits have been filed to prevent the project and as one opponent says “We've pledged to fight this with every tool at our disposal” (Las Vegas Review-Journal, August 9, 2008 pg 1B). The Authority has also been referred to as a “foreign entity” (Las Vegas Review-Journal, September 7, 2008, pg. 27A).

Such negative reactions to reallocation are common place. An Arizona legislator introduced a bill in the state legislature designed to prevent water exports to neighboring Las Vegas. The motivation was “to do everything that we can to protect our water” (Associated Press Financial Wire, March 13, 2007). Water transfers to irrigate a golf course have been protested (Ruidoso News, Nov. 20 2008). When farmers offered to sell Santa Fe water, 200 protesters from the farming area descended on the City Council bringing “the proposal to a screeching halt” (Albuquerque Journal, Feb.10, 2005, A1). Protests have been filed against a proposed transfer from the Green River to a nuclear power plant in Utah (Salt Lake Tribune, Nov. 1, 2009). Colorado and Wyoming have also been looking at large transfers from the Green River, a Colorado River tributary.

Perhaps the most vehement reactions are related to endangered species. The response to two federal court decisions reallocating Rio Grande water for the silvery minnow brought a typical political response. The mayor of Albuquerque took out a half page ad titled “Someone's Stealing our Water.” The mayor wrote a column in the same paper accusing the federal district judge on the case of a “thoughtless and insensitive act” and ignoring “common sense and human need” (Albuquerque Journal, September 24, 2002 pg. A1). The judge, on the other hand, was reluctantly following the requirements of the Endangered Species Act. When the circuit court upheld the district court ruling, the New Mexico Attorney General stated “This case involves one pivotal question: Who controls New Mexico's water – New Mexico or the federal government?… To me the answer will always be New Mexico” (Albuquerque Journal, June 13 2003, pg. A1). For politicians it's “our water,” and for water right holders it's always “my water.” For many, water is somehow “sacred” with any change in use being a personal or political affront. In reality, water is a shared resource with a substantial public interest in the way it is managed. This interest can be manifested at both the state and federal levels.

However, some places do succeed in reallocating large volumes of water. Of interest is the Imperial Valley's water transfer to urban interests in southern California (Press Enterprise, Riverside CA, Dec. 12, 2009, pg. C6), U.S. Senate approval of a bill facilitating transfers in California's central valley (State News Service, December 16, 2009), and water transfers from cities to farms along the Arkansas River in Colorado (Pueblo Chieftain, July 15, 2008).

This brings us to the third question – how can conflicts be reduced? The answer to that question is unclear. Reallocation is an emotional issue that sometimes defies rational thought. The attitude that change is going to impact someone personally is hard to overcome. But, successful transfers have occurred. This merits additional research to determine why some succeed and others fail. Avoiding confrontation may not be easy. Recently I was told by a city water manager that they had learned from previous experience, and their next transfer project would be less controversial. As soon as the project was announced the protests started. Whether the project will ultimately be successful is difficult to determine at this point.

So what does this issue of JCWRE contribute to the debate on reallocation? It starts out with an article that clearly illustrates why reallocation should be at the center of the debate on western water. The article by Kenney et al. discusses drought and vulnerability on the Colorado River. This article is a follow-up on a special issue of the Water Resources Bulletin (October 1995). Kenney and his co-authors feel that the way water supply vulnerability was characterized in that issue is “dated if not erroneous.” With changes in water supply vulnerability, a different context is required for reallocation discussions. This article is followed by four case studies on water reallocation. The first two address reallocation issues associated with endangered species and the next two deal specifically with markets. Benson's article puts legislative reallocation in a broad context. She selected the Methow Valley as a case study which incorporates federal lands into this complex mix of issues. Briefly discussed are constitutional issues related to “takings.” Zetland's article examines the Sacramento-San Joaquin Delta, its health and that of the endangered Delta Smelt. Contor examines the possibility of ground water banking in Idaho and concludes that it would improve water marketing. The Pease article centers on the Rio Grande and New Mexico's institutional constraints on water markets. These case studies are followed by a philosophical reflection by Bauer looking at what western states might learn from water markets in Latin America. The last three articles deal with the reallocation decision process. Two articles deal with incorporating models into the reallocation process so that reallocation decisions are improved. One of the major problems with any form of reallocation is the uncertainty that results from proposed transfers. One solution might be better scientific models designed to reduce uncertainty. The model used by Broadbent et al. integrates engineering, biophysical science, and behavioral/institutional variables with water markets. Brookshire et al. use complex modeling to incorporate ecosystem services in the reallocation decision process. The last article (Matthews) attempts to think outside the box and speculates on what reallocation decisions would look like if the water estate was dominant.

Water reallocation creates difficult policy choices. But, reallocation is necessary if contemporary public preferences are to be satisfied. The debate over how to resolve potential conflicts should begin before conflicts arise, but seldom does. The “truth” is reallocation will occur in the future. The question is whether it can occur without animosity.

End Note

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    Reallocation is being used in the broadest possible context referring to both a transfer of an existing right and the establishment of a new right where the water will be moved to a new location for use.

Author Bio and Contact Information

Olen Paul Matthews is a Professor of Geography at the University of New Mexico. He has a degree in law and has spent many years writing and thinking about water policy. Although much of this thought has been directed toward transboundary water issues, in recent years he has been puzzling over water rights and water reallocation. He expects to remain puzzled by the complexities of water transfers. He wishes the process could be simplified with property rules that make sense, but believes that politics have a solid chance of prevailing over good sense. He can be contacted at: Department of Geography, MSC01 1110, 1 University of New Mexico, Albuquerque, NM 87131 or opmatt@unm.edu.